The US could be hit with beef shortages and price rises after the world’s largest meat producer was forced to close all of its plants due to a cyber attack which the White House has blamed on Russian hackers.
JBS – which supplies 20 per cent of all beef and pork in the US – warned the Memorial Day weekend hack could disrupt its supply chains and increase prices up up to 30 per cent.
JBS received a demand from ‘a criminal organization likely based in Russia’ following the attack that has affected its operations in Australia and North America, White House spokeswoman Karine Jean-Pierre said on Tuesday.
The Department of Agriculture has asked other major meat processors to increase capacity and mitigate potential beef supply issues due to the country’s reliance on JBS production lines.
All nine of the company’s beef plants in the country have shut down as a result of the cyber attack, according to the United & Food and Commercial Workers, which represents employees at the plants. It is unclear when those plants will resume operations.
The company has two plants in Nebraska, and one each in Michigan, Wisconsin, Pennsylvania, Colorado, Utah, Texas and Arizona.
‘We have cybersecurity plans in place to address these types of issues… the vast majority of our beef, pork, poultry and prepared foods plants will be operational tomorrow,’ Andre Nogueira, JBS chief in the United States, said in a statement Tuesday.
The company statement did not say if any ransom had been paid.
The attack also caused JBS’s Australian operations to shut down on Monday. JBS sells meat under 52 different brand names in the US, including Certified Angus Beef, 5 Star Reserve, Blue Ribbon Angus Beef and Pilgrim’s.
A spokesman said the firm notified the Biden administration and that the Federal Bureau of Investigation has launched an inquiry.
‘On Sunday, May 30, JBS USA determined that it was the target of an organized cybersecurity attack, affecting some of the servers supporting its North American and Australian IT systems,’ it said in a Monday statement.
The Department of Agriculture said in a statement: ‘USDA has reached out to several major meat processors in the United States to ensure they are aware of the situation, encouraging them to accommodate additional capacity where possible, and to stress the importance of keeping supply moving.’
The Biden administration, meanwhile, has reportedly offered assistance to JBS.
White House Principal Deputy Press Secretary Karine Jean-Pierre said that the administration is ‘engaging directly with the Russian government on this matter and delivering the message that responsible states do not harbor ransomware criminals.’
DailyMail.com has reached out to the Russian government seeking comment.
JBS controls about 20 per cent of the slaughtering capacity for US cattle and hogs, according to industry estimates.
JBS reported the incident a few weeks after a ransomware attack on Colonial Pipeline, the largest fuel pipeline in the United States, crippled fuel delivery for several days in the US Southeast.
That hack caused days of misery for drivers, as fuel pumps ran dry amid panic-buying of gas. A $4.4 million ransom was paid after the May 7 attack, their CEO confirmed.
The attack on JBS also comes at a time of rising meat prices as China increases imports, food costs rise and plants continue to face labor shortages that started during the COVID-19 pandemic.
The cyberattack could push US beef prices even higher by tightening supplies, said Brad Lyle, chief financial officer for consultancy Partners for Production Agriculture.
The average unit price for US fresh beef in April rose by 5 per cent from March and was up about 10 per cent from a year earlier, according to NielsenIQ data.
Pork and chicken prices are each up about 5.4 per cent from last year.
US inventories of frozen beef at the end of April were 5 per cent lower than a year earlier, while frozen pork supplies were down 26 per cent, according to the US Department of Agriculture.
Any impact on consumers would depend on how long production is impacted, said Matthew Wiegand, a risk management consultant and commodity broker at FuturesOne in Nebraska.
‘If it lingers for multiple days, you see some food service shortages,’ Wiegand said.
‘The good thing is that this happened after Memorial Day. You are on the downhill side of summer demand and summer bookings.’
Two kill and fabrication shifts had been canceled at JBS’s beef plant in Greeley, Colorado, due to the cyber attack, representatives of the United Food and Commercial Workers International Union Local 7 said in an e-mail.
JBS Beef in Cactus, Texas, also said on Facebook it would not run on Tuesday – updating an early post that had said the plant would run as normal.
The United States Cattlemen’s Association, an industry group, said on Twitter that it had reports of JBS redirecting livestock haulers who arrived at plants and were to unload animals for slaughter.
Last year, cattle and hogs backed up on US farms and some animals were euthanized when meat plants shut due to COVID-19 outbreaks among workers.
JBS Canada said in a Facebook post that shifts had been canceled at its plant in Brooks, Alberta, on Monday and one shift so far had been canceled on Tuesday.
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